From Facebook to Foursquare, location-based services have never been hotter. To discover why, let’s follow the trail–and the money.

Are you sitting somewhere comfy? Because right at this moment, your smartphone is likely calculating and then sharing your seated location. But don’t worry: You are far from alone. Location-sharing services are on the rise. Here, the big reasons for the trend in personal placement.

Recently Facebook began a beta-test of its first mobile advertising system. It’s not a straightforward Facebook ad-placement scheme, instead it means Facebook will place banner adverts that may appeal to you, personally, into other apps and sites based on targetable criteria in your Facebook profile. Advertising partners choose their demographic, and when a user visits a site or app that’s in the ad system their ID is whisked off to Facebook, which responds if there’s an ad that fits that demographic.

The triggers that set off the ads include all sorts of things from Likes, your age and gender–and your location.

Essentially Facebook’s leveraging its array of user data, including location, to ensure that when a user visits a site signed up to Facebook’s ads they see banner adverts that are more specifically suited to you. The hope is that it’ll attract you more than the usual banner ads we all ignore online because they’re for items that are of no interest to us.

But it also means that you’re paying for the ads–not in cash, but in allowing Facebook to fit your data to an advertiser’s profile. And one of the bits of data you’re sharing here is your location. For a long time location-specific advertising has made sense, simply because it allows hyper-precise targeting. But in terms of mobile computing it’s never been very precise because you don’t take your computer everywhere and it doesn’t have GPS. Your smartphone, of course, does.

Remember the clock that the Weasley family has in Harry Potter? It doesn’t have hands to tell the time, instead its arms point to the location of the different family members … by magic. Turns out that there are apps that let you do that right now. Apple’s Find My Friends is one of them, and it’s integrated directly into the OS so you can even ask Siri something like: “Where’s my wife?”

But the Life360 iOS app does this same trick in a much more family-orientated way, and says it has over 15 million registered users. It’s even a little like the Weasley clock because it can include safety and threat locations.

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In terms of disaster scenarios, apps like this are probably incredibly useful. They may also play a role for those nervous of their spouse’s dangerous jobs or, let’s face it, over-protective parents (who insist their kids sign up to the location data or else they lose privileges). Find My Friends is quite definitely useful in trying to coordinate meeting up in an unfamiliar place–instead of picking a landmark and meeting there, which includes navigating your way in a strange location, you can just use the app’s mapping powers.

Odds are that where we were maybe nervous of sharing our location, many more of us will be using systems like this in the future because of their obvious benefits.

Telmap Navigator is a free GPS navigator app for some smartphones, with its free price enabled by embedded advertising. One way this ad system works is to have “branded widgets” that appear in the app’s systems and its homepage. Ad partners buy the widgets to tempt app users to tap on them in the hope they’ll chose that brand over another. The system jus launched in South Africa, and it’s been reported that when the app went to number one on the Apple App Store brands like KFC, BP, and Nando’s saw “huge benefits.” The widgets tell users where nearby outlets for that brand are, and they’re interactive so they can navigate you there, call the store, or share the info on social media.

The app’s users get a facility that quickly helps them find a restaurant or a gas station, the brands get the additional traffic and eyeball-time for their logos, and they also get monthly metric data about clicks and click-to-drive which lets them work out how effective the ads are.

This is another form of location-based advertising, but unlike Facebook’s system it’s user-initiated. Competition for visibility in front of the user happens at the ad-partner side, and the goal is to deliver genuine services to users of navigation apps rather than to merely show them a graphical ad.

This sort of location-specific ad interactivity is only really possible in smartphones, and it allows alternative business models for the app developer point of view. It may be something we see more of, and become happier using.

Google Now was featured in Technology Review recently, with the interesting idea that this may be the style in which Google competes with Apple’s personal digital assistant. Instead of a reactive voice control system, Google may be focusing on Now’s ability to pre-empt user needs by delivering up specific information automatically. That could involve time-based alerts, but also location-based alerts: Now, for example, can deliver live bus times to its users as they walk up to a bus stop. Apple’s Passbook does something similar, via its location-aware alerts for boarding passes at airports and so on.

The whole point of a system like this is to save users a few seconds of time–time they would’ve spent searching for the information manually, or accessing a specific app that they knew contained it. To preempt user actions like this, it’s vital that their smartphones and back-end data collation services at Apple and Google know where they are in real time, and that they have a sense of their previous habits (Now can alert you to delays on your journey to work, even before you set off, for example).

Again, while these systems are in their infancy now, it’s arguable that we’ll all end up using them more and more–and soon, too–because they’re evidently incredibly useful. And by doing so, we’ll be sharing our location with companies like Apple, Google, their advertising partners and third-party analytic firms.

So why is there this explosion in location-based services that require us to frequently share our absolute position–data that, if you think about it, is incredibly personal and potentially sensitive?

Partly it’s the fact that smartphone and tablet penetration has reached critical mass. A recent Pew study reported that 50% of U.S. adults now have a smartphone or tablet. Many of these devices have precise GPS location facilities, or their location can be approximated via Wi-Fi networks they’re connected to. Location-aware mobile advertising and the plethora of other mobile services only make sense when there’s a large audience for it, and some services only make sense if lots of people are sharing their location (such as Apple’s automated traffic alerts). So the smartphone is an enabling technology.

But it’s also the fact that users are experimenting with sharing our location data in many different ways. Smartphones and tablets bring many more tricks and powers into our daily lives than we’d been able to imagine, and engaging with them has become an essential part of trying out the newest device.

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When they’re brand new, even pushed location-based adverts seem exciting and clever (versus tiresome and skippable, like TV ads perhaps) and that’s the first step in becoming habituated to them. It’s in Facebook’s and Google’s interest to expand their advertising powers like this. Back in 2010 Google released an extension of AdWords that allowed advertisers to deliver mobile pop-up ads in direct response to a user’s location. Facebook revealed it was working on a mobile location-aware ad system back in February. Even Apple, which isn’t the biggest player in the ad game, has filed a number of patents that allow hyper-precise location-based ads on the iPhone.

Foursquare is the best example of the radical change in location sharing. Since its debut in 2009 it’s amassed 25 million users. GigaOm notes that right now it’s evolving very rapidly into a local search system, and that it seems set to make money with its promoted updates ad business. Unlike some other ad services Foursquare can actually convert promoted ads into direct sales, because its very nature entices people to locations where they “check in.” If 25 million people are prepared to use Foursquare and not just share their location data, but to actively broadcast it to the world, then it’s arguable many more smartphone users would be happy to share at least part of their location data.

A new survey by LoyaltyOne points out that consumers are a little wary of sharing data thanks to controversies and a perceived lack of returned value–but 27% of the respondees were up for receiving promotional data automatically if they’re near a retail outlet, more than a quarter would share their location if there was a chance to win prizes, and over half would do so for cash rewards.